After the conclusion of the consent solicitation led by Sellers
Capital LLC, Sellers Capital Master Fund, Ltd. and their slate
of four independent director candidates, on January 28,
2009 we recognized the election of William M. Adams, Christopher
J. Davino, Jack Jacobs and Bruce Steinberg as directors of the
company. On the same date, Mark A. Sellers was elected as our
non-executive chairman of the board, and Mr. Davino, then a
principal and head of the corporate rescue group of XRoads
Solutions Group, LLC, a corporate restructuring management
consulting company, was appointed as our interim president and
chief executive officer.

Prior to the election of these new directors, we disclosed that
due to our deteriorating financial condition we would likely
need to raise financing in fiscal year 2010. Soon after our new
directors were seated and Mr. Davino began working as our
interim president and chief executive officer, we recognized
that our efforts to raise financing should begin immediately. At
a meeting of our board on February 19, 2009, our directors
discussed our need for substantial additional financing and the
importance of beginning that process as early as possible to
allow us to consider all available options and maximize our
potential leverage in any negotiations. At the February 19,
2009 board meeting, our board authorized a process to be led by
Mr. Davino in which we would consider all of the types of
financings that might be available to us, whether through new
credit facilities, a mezzanine financing, a private investment
in public equity (or PIPE) offering, a traditional equity
financing or a possible strategic transaction.

Over the course of the next month, Mr. Davino contacted
approximately 20 investors that provide financing to distressed
companies and that we believed were the most likely parties to
provide funding to the company. Each of these investors declined
to make an offer to provide financing to us. We believe that
these investors declined to provide financing to us for a
variety of reasons, including the uncertain nature of our rights
in our Titanic assets, the relatively small size of the
investment, the comparatively illiquid nature of an investment
in the company, and the high interest rates available elsewhere
in the distressed debt markets. During this period of time, we
also considered potential licensing arrangements, joint ventures
and other strategic transactions that might resolve our need for
financing, but determined that these alternatives were either
not available, would not provide sufficient financing or would
not maximize the companys enterprise value. Our board and
management were also aware during this time period that, due to
our deteriorating financial performance, we were likely to lose
access to our existing revolving credit facility with Bank of
America in the near term.

In mid-March, Mr. Davino approached our chairman,
Mr. Sellers, to inquire whether Sellers Capital might be
interested in providing financing to the company.
Mr. Sellers indicated that Sellers Capital could consider
making a proposal, but that due to Sellers Capitals
investment restrictions any investment would need to be in the
form of equity.

At a meeting of our board on March 25, 2009, our board
determined that, although we would continue to pursue possible
financing and other strategic transactions with other parties, a
special financing committee should be formed to consider a
possible financing by Sellers Capital. The board then approved
the formation of the Independent Financing Committee, consisting
of Mr. Adams, Mr. Davino and Mr. Alan B. Reed,
each of whom was considered to be independent of Sellers
Capital. The Independent Financing Committee was given the
authority to consider and negotiate the terms of any financing
proposal made by Sellers Capital or any other potential
investors and to engage its own financial advisors and legal
counsel. The Independent Financing Committee subsequently
engaged Ladenburg Thalmann & Co. Inc.
(Ladenburg) as its financial advisor and Greenberg
Traurig, P.A. as its legal counsel.

The initial proposal provided to us by Sellers Capital provided
for a $12.0 million convertible note financing, the
principal amount of which would convert into common stock of the
company at a premium to prevailing market prices. The offer
contemplated that Sellers Capital would provide at least
$6 million of the financing, and the balance would be
provided by Sellers Capital and other investors that the company
would approach after the finalization of terms with Sellers
Capital, with Sellers Capital being obligated to provide any
part of the financing not provided by other investors. Because
the equity feature of the financing proposed by Sellers Capital
would require shareholder approval under the listing rules of
the NASDAQ Global Market and would require the company to
authorize additional shares of common stock (as more fully
described below under the section titled Shareholder
Approval Condition), the conversion of the debt into
equity would be conditioned on approval by our shareholders. The
offer also provided that, if such shareholder approval was not
obtained, the maturity date of the debt would accelerate and a
penalty interest rate would apply.

In multiple meetings during March and April, the Independent
Financing Committee considered the financing proposal made by
Sellers Capital and negotiated the terms of the potential
transaction directly with Sellers Capital. During these
negotiations, the Independent Financing Committee negotiated
several enhanced terms for the proposed financing, including a
lower interest rate, a longer period for the company to repay
the indebtedness if shareholder approval for the conversion
feature was not obtained, and a prepayment provision that would
allow the company to prepay the convertible notes in the event
that the company could obtain alternative financing on better
terms, subject to a prepayment fee in the form of warrants to
purchase a number of shares of our common stock equal to 7.0% of
the number of shares into which the convertible notes would
convert. The Independent Financing Committee also agreed that,
if shareholder approval for the conversion of the notes was not
obtained, the notes would become immediately secured by a first
priority security interest in all of our assets, including the
stock of our subsidiaries.

During March and April, the Independent Financing Committee also
continued to consider other possible financing transactions and
strategic transactions that might be available to the company,
including by utilizing an investment banking firm to contact
possible acquirers. The Independent Financing Committee reported
its progress to our board in three board meetings held during
April. Upon the reporting of our financial results for our
fiscal year 2009 in May, we lost access to our existing
revolving credit facility with Bank of America, due to our
financial performance.

In board meetings held on May 4, 5 and 6, the Independent
Financing Committee reported its conclusions to our board and
explained the reasons for its conclusions. The Independent
Financing Committee concluded that the Sellers Capital proposal
was the best financing option available to the company and
recommended that our board approve the proposal. The Independent
Financing Committee based its recommendation on:



the terms of Sellers Capitals offer that the committee
believed are favorable to the company, including the relatively
low interest rate, the conversion of the debt into equity at a
premium to market prices prevailing at the time, and the lack of
an upfront security interest in the companys assets;



the enhanced provisions that the committee was able to negotiate
with Sellers Capital, including the ability of the company to
prepay the notes, subject to a limited equity penalty, if
financing became available on better terms;

the presence of limited restrictive covenants on us in the
proposed terms of the Financing Transaction;



the lack of any financing proposals from any of the parties that
had been approached by the company;



the committees belief that the Financing Transaction had
the potential to maximize our enterprise value to a greater
extent than the potential licensing arrangements, joint ventures
and other strategic transactions that the committee
considered; and



the presentation and fairness opinion provided to the committee
by Ladenburg, which is described below in the section titled
Fairness Opinion and Analysis of Ladenburg
Thalmann & Co. Inc.

Our board considered the recommendation of our Independent
Financing Committee during the meetings held on May 4, 5
and 6, and approved the Financing Transaction at the conclusion
of these meetings. The board also resolved to put before our
shareholders at the annual meeting the proposals that are set
forth in Proposal Nos. 2 and 3. Our board also resolved to
recommend that our shareholders vote in favor of these proposals.

In connection with approving the Financing Transaction, our
board approved under Section 607.0902 of the Florida
Business Corporation Act (known as the Control Share Acquisition
Statute) the issuance of shares of our common stock to Sellers
Capital Master Fund, Ltd. upon conversion of the Notes in an
amount that would result in it beneficially owning more than
one-third of our outstanding common stock. However, our board
did not approve the acquisition by Sellers Capital Master Fund,
Ltd. of more than a majority of our outstanding common stock, an
additional threshold requiring approval under the Florida
Control Share Acquisition Statute. Therefore, if Sellers Capital
Master Fund, Ltd. desires to acquire shares that would result in
it owning more than a majority of our outstanding shares, it
would need the approval of our board or our shareholders under
such statute in order for the acquired shares to have voting
rights in its hands.

On May 6, 2009, we entered into a convertible note purchase
agreement with Sellers Capital Master Fund, Ltd., and on
May 11, 2009, we sold an initial Note to Sellers Capital
Master Fund, Ltd. in the principal amount of $6.0 million.
Between May 6 and the second closing on June 15, 2009, we
approached numerous potential investors, including a number of
our existing investors, about participating in the second
closing. Only one of these investors, SAF Capital Fund LLC,
elected to participate in the Financing Transaction. Therefore,
in the second closing, we sold Notes in the principal amount of
$0.45 million to SAF Capital Fund LLC and Notes in the
principal amount of $5.55 million to Sellers Capital Master
Fund, Ltd., pursuant to its obligation to acquire the Notes not
acquired by other investors.

The terms of the Financing Transaction are summarized above in
the section titled Summary of the Financing
Transaction and are described more fully in the section
below titled The Financing Transaction.